A Modern National Industrial Strategy.

Historians ask three essential questions.  First, What happened?  This question is about assembling a richly detailed Chronology of events.  Second, Why did it happen?  This is about Causation and historians never accept single-factor explanations for why things happened.  Third, What difference did it make that it happened?  This is about Consequence and, as with Causation, there is never just one result.  This can be mantra-fied as either What?/Why?/So What? Or as Chronology/Causation/Consequence. 

William Galston provides a good example of historical thinking in a rapid overview of the politics and economics of the last thirty years.[1] 

What Happened?  From 1990 through 2000, the American economy expanded rapidly and the fruits of growth received a wide distribution as real wages increased.  Growing industrial productivity did not reduce the manufacturing labor force; instead it raised wages. On New Year’s Day 2001, there were about 17 million people holding down manufacturing jobs in the United States.[2]  Between January 2001 and June 2009, the United States lost 5.4 million manufacturing jobs.  That’s just shy of one-third of the industrial manufacturing jobs.  Gone in less than a decade.  American manufacturing had long been dispersed into smaller cities and rural areas.  The biggest shocks were felt in areas outside the main media consumer markets. 

Why did it happen?  First, the Clinton Administration (1992-2000) adopted a policy mix of extending the open world market economy that had been created under American leadership after the Second World War.  It would reach out from its core American, Western European, and East Asian strongholds to the lands where Marxist economics had been discredited.  In practice, this meant Eastern Europe and Russia, China, and leftist governments inthe Developing World. 

Second, contrary to their intent, these policies actually harmed American interests.  Capitalists didn’t invest in ways that were entirely productive and efficient; industries that were essential for American national security and/or supply chains languished or were off-shored; and China, in particular, took advantage of its favored position in the World Trade Organization (WTO).  The result of these policies came in a “hollow[ing] out” of American manufacturing. 

Why does it matter?  For one thing, these developments stimulated a “populist revolt” in the United States.  This ran from the “Tea Party” dissidence within the Republican Party during the Obama Administration to Trumpism.  In Democratic rhetoric, this threatens democracy. 

For another thing, Jake Sullivan, President Biden’s national security adviser, has announced a new “modern national industrial strategy.”  The goals of that strategy will be to strengthen the industrial foundations of national security, promote economic growth, and create a lot of well-paying jobs to replace those lost in the lost decades that began this century.  The instruments will be strategic, rather than general, agreements on tariffs and trade, and subsidies.  Commerce Secretary Gina Raimondo’s shepherdessing of the Biden Administration’s semi-conductor manufacturing efforts foreshadows these larger intentions. 

            It’s an honest piece of History.  It is far from being a complete account of what happened or why it happened.  It endorses, perhaps too easily, one party’s program of great consequence. 

[1] William Galston, “Biden’s ‘Foreign Policy for the Middle Class’,” WSJ, 31 May 2023.  The customary American blurring of middle-class and working-class is here on display. 

[2] Total civilian labor force was 143 million.  See: U.S. labor force 1990-2022 | Statista 

Ukraine and a Larger Crisis.

            Walter Russell Mead argues American and European aid for Ukraine is neither “a charity project,” nor a distraction from the even-more-important Indo-Pacific region.[1]  Instead, it is “a golden opportunity” that we should seize “with both hands.”  He spells out some of what he means and leaves it to readers to understand other parts.  Not all of his argument is persuasive, but it is worth considering. 

Mead argues that Putin’s war against Ukraine “has ignited a national awakening.”  Post-war Ukraine, he predicts, “will be a formidable new force in Europe whose interests and outlook place it firmly in alignment with the U.S.”  Maybe, but also maybe not. 

            He seems to be on target about the “national awakening.”  Two qualifications need to be made.  First, that revival began well before the Russian invasion in February 2022.  The 2013-2014 “Euromaidan” grass-roots protests evicted the pro-Russian President Viktor Yanukovych.[2]  Russia’s reoccupation of Crimea and its sponsorship of pro-Russian movements in the Donbas followed.  Second, that revival has two fronts.  In 2019, voters elected Volodymyr Zelensky as President in a revolt against the endemic corruption in post-Soviet Ukraine.  Russia’s out-right invasion has diverted attention from the corruption issue, but some Ukrainian oligarchs don’t seem to have felt the same nationalist pride coursing through the veins of ordinary Ukrainians. 

            Mead may or may not be on target about a “formidable” post-war Ukraine.  He foresees a country with a “battle-tested army” that will “join Poland, the Baltic republics, and the Scandinavian countries” in a barricade against Russian expansion. 

Any future event can become the focus of present hopes and fears.  So all predictions should be taken with a grain of salt.  In the case of a formidable post-war Ukraine, other examples drawn from history urge caution.  In 1783, the new United States emerged from the War for Independence exhausted and with its people eager to turn their attention to other pressing concerns.  After the Second World War, the British people voted for domestic reforms, rather than the preservation of empire.  Defense spending fell sharply.  “Battle-tested armies” shrank mightily in both cases. 

Ukraine’s army largely consists of patriotic volunteers who rushed to the colors when Russia attacked.  They’re going to want to go back to civilian life when the war ends.  Americans estimate Ukrainian military casualties at 20,000 killed and 130,000 wounded; civilian deaths are estimated above 40,000.[3]  Much of the country has been physically devastated into the bargain.  Bouncing back from such losses will not be easy. 

            How will this redound to the benefit of the West elsewhere?  In two ways.  First, an exhausted, perhaps even defeated Russia will be no useful partner to Xi Jinping.  Mead argues that the Eastern bloc in NATO and the European Union will resist any post-war (or wartime, come to that) appeasement of Russia by the Western Europeans. 

            A defeat for Russia will revive the credibility of an American alliance, eroded by decades of mismanagement.  South Korea, Taiwan, Japan, and countries in Southeast Asia may all take heart in facing the Chinese danger.  Americans shouldn’t take a victory lap.  We’re just starting. 

[1] Walter Russell Mead, “Putin’s War Is America’s Opportunity,” WSJ, 30 May 2023. 

[2] See: “Winter on Fire: Ukraine’s Fight for Freedom” (dir. Evgeny Afineevsky, 2015).  Excellent documentary. 

[3] See: Casualties of the Russo-Ukrainian War – Wikipedia 

One Man One Vote, One Man One Tax Rate.

            There are about 180 million taxpayers in the United States.  At the national level, the United States has a highly progressive income tax.[1]  Who pays what share of taxes? 

            About 43 percent of taxpayers earn less than $50,000 a year.  That’s a little north of 72.5 million people.  Their share of the total income is 10.5 percent.  They pay -4.8 percent of the income tax.  That is, through one tax “credit” or another, they get a “refund” check from the IRS.  The median income—half above, half below—is just a hair under $50,000 a year. 

            About 27 percent of taxpayers earn between $50,000 and $100,000 a year.  They account for about 18.6 percent of total income.  They pay 6.3 percent of the income tax. 

            About 20 percent of taxpayers earn between $100,000 and $200,000 a year.  They account for 26.6 percent of total income.  They pay 19.8 percent of the income tax. 

            About 10 percent of taxpayers earn more than $200,000.  Their share of the total income is 44.3 percent.  They pay 78.7 percent of the income tax.  Those earning $1 million or more receive 16.1 percent of total income.  They pay 39 percent of the taxes.  There are about 900,000 taxpayers in this group.  That’s about 0.5 percent of the taxpaying population. 

            Several different things are going on around progressive tax rates and the debt ceiling. 

            First, the United States also has a highly “progressive” distribution of income.  It is even more “progressive” than is the tax system.  About 70 percent of taxpayers account for 29.1 percent of total income.  About 30 percent of taxpayers account for 70.9 percent of income.  As Willy Sutton said, “That’s where the money is.”  

Second, taxation and spending are explicitly a transfer from the few rich to the many not-rich.  According to one author, “Democrats have a huge advantage (63 percent) with voters earning less than $15,000 per year. This advantage carries forward for individuals earning up to $50,000 per year, and then turns in the Republicans’ favor — with just 36 percent of individuals earning more than $200,000 per year supporting Democrats.  Interestingly, the median household income in the United States is $49,777 — right near the point where the Democratic advantage disappears and the Republicans take over.” Moreover, “About half of Democrats express satisfaction with their personal financial situation, compared with 61 percent of Republicans and 52 percent of Independents.”[2]  Democratic voters may respond enthusiastically to government action to address their dissatisfaction. 

Third, the rich don’t see this transfer system as legitimate beyond a now-uncertain point.  From the 1930s through the 1960s, the American economy was dominated by well-established industries whose entrepreneurial founders had long since handed over control to professional managers.  These companies were highly-unionized.  The American economy felt little foreign competition.  Content with their trust funds, sinecures, and charities, the “owners” had gone off to Harvard and Palm Beach.  Then came the upheavals of the 1970s and the rise of many new entrepreneurs building new industries.  They had earned, not inherited, their money.  They wanted to keep it.  Since the Reagan era, they have been fighting back to good effect.  Democrats now pine for the “Good Old Days.”[3]  Complexity and nuance are lost in this ugly fight. 

[1] Laura Saunders, “It’s Tax Time.  Here’s Who Paid the Most,” WSJ, 15-16 April 2023. 

[2] See: Economic Demographics of Democrats & Liberals – Politics & Debt 

[3] Walter Russell Mead, “”Progressives’ Want to Go Back to the 1950s,” WSJ, 2 May 2023.  Who doesn’t? 

Tell the Truth as You See It 1

            The Christian apologist C.S. Lewis says “Try to tell the truth as you see it.”  OK, here goes. 

I think that Donald Trump is an appalling human being.  I voted against him in 2016 because I believed him unfit to be president, even in comparison to the lamentable Hillary Clinton.  I voted against him in 2020 specifically because of his abuse of the Vindman brothers.  “Support the troops.”  I’m going to vote against him in 2024, if that becomes necessary, because of 6 January 2021.  

I think that Donald Trump was a far more consequential—even “better”—president than Joe Biden, Barack Obama, George W. Bush,[1] or Bill Clinton.  More consequential–and even “better”–than would have been Hillary Clinton.[2] 

Trump recognized the reality of massive unrestricted immigration through the Southern border.  He recognized—and tried to act on—the failure of the North Korea policy of previous administrations.  He took real action to deal with the Chinese challenge.  He recognized the uselessness of the NATO allies.  He halted the flood of government by bureaucratic rule-writing and executive orders.  All Trump’s policies on these matters were good things.  Many of them have been maintained by the Biden administration. 

            I think that there is a good way to reduce poverty.[3] 

            Stay in school, even if it’s a lousy one.  Don’t disrupt class.  You can learn something even in a deficient school system.[4] 

            Graduate from high school, then get some more education.  The four-year college residential education is over-valued by American society.  Community colleges and trade schools are fine.  Students can live at home and commute, pay lower tuition, not pay for dorms and dining halls, and work part time.  Costs a lot less and it isn’t on a four-year schedule. 

            Get a job, any job.  Work is better than charity or crime.  Hundreds of millions of people—immigrant and native-born, black and white and read all over, knew this in the past and still know it today. 

            Work hard.  At some point, you may get a promotion or a pay raise. 

            Don’t get married until you have steady work. 

            Don’t have kids until you’re married.  Condoms are $1 each at CVS/Walgreens/RiteAid.  For many decades, they worked for most people who were determined to avoid an unwanted pregnancy.  “But men don’t like using rubbers.”  You never heard the expression “I got the pussy, so I make the rules”? 

            We should stop paying people to be poor.  It’s a capitalist economy. If you create a market for something, someone will fill it.

[1] Trump may not be more “consequential” than George W. Bush.  The invasion of Iraq is the gift that just keeps on giving.  Kind of like an antibiotic-resistant flesh-eating infection.  Trump was certainly a better president than Bush.  Equally certainly not a better man.  Such are the paradoxes of life. 

[2] Never mind breaking the “glass ceiling.”  We’ve already had one woman president.  Her name was Edith Wilson.  We’re likely to have another.  Her name is Dr. Jill Biden. “Jill Biden and the Inner Circle.” Sounds like a band.

[3] Juan William’s prescription, lightly amended. 

[4] See Maya Angelou, I Know Why the Caged Bird Sings (1969) for proof.